Recently in "Commentary" Category

Want to know what Google is up to? Here you go

Commentary

GoogleI've seen lots of hand-wringing and sweaty prognosticating about Google. What will it do? What does it want? Is that don't be evil mantra for real?

Funny thing is, Google's strategy has always been in plain sight. There's no obfuscation. There's no misdirection. Heck, this New York Times piece spells it out:

Google has used a similar approach -- immense computing power, heaps of data and statistics -- to tackle other complex problems. In 2007, for example, it began offering 800-GOOG-411, a free directory assistance service that interprets spoken requests. It allowed Google to collect the voices of millions of people so it could get better at recognizing spoken English. A year later, Google released a search-by-voice system that was as good as those that took other companies years to build.

See what Google did there? It released a free service so it could gather huge amounts of data that could then be used in another product. That's what Google does. Free leads to data, data leads to another product. Repeat over and over and over and over again.

Ebook pricing gets even more interesting: Apple's model vs. Amazon's subsidy

Commentary

iPad and Kindle

Tablets and devices will get all the coverage, but I believe ebook pricing is going to be 2010's biggest issue for publishers.

To illustrate ... this New York Times piece explains how Apple's $12.99-$14.99 range represents the outer limit for iBooks pricing. Those price points aren't set in stone. From the Times:

... Apple inserted provisions requiring publishers to discount e-book prices on best sellers -- so that $12.99-to-$14.99 range was merely a ceiling; prices for some titles could be lower, even as low as Amazon's $9.99. Essentially, Apple wants the flexibility to offer lower prices for the hottest books, those on one of the New York Times best-seller lists, which are heavily discounted in bookstores and on rival retail sites. So, for example, a book that started at $14.99 would drop to $12.99 or less once it hit the best-seller lists.

Sounds like Apple and Amazon are closer than we initially thought, right?

Nope. Not at all.

The single most important sentence in that Times article is buried at the very end:

Under the agreements with Apple, both the publishers and Apple should make money on each book sale. [Emphasis added.]

Ahh, there we go! Whether the price is $14.99, $12.99, $9.99 or $1.99, Apple will take its 30 percent. Set the price lower and sell more books? You betcha! Jack the price up and sell fewer? Absolutely!

What Apple won't do is subsidize a price point.

What do you do with a writer's work if they screw up?

Commentary

TechCrunch terminated an intern who accepted compensation from an outside company in exchange for coverage. The announcement strikes an appropriate tone, but it also includes a passage that ties into a much bigger issue: when a writer goes rogue, what do you do with their published work? Here's how TechCrunch responded:

This was not one of our full time writers, and so the frequency of posts was light. Nevertheless, we've also deleted all content created by this person on our blogs. We are fairly certain that most of the posts weren't tainted in any way, but to be sure we've removed every word written by this person on the TechCrunch network.

One big caveat: the intern in question is a minor, so that certainly takes precedence in any reaction. But the intern posted his own follow up. Privacy implications are moot at this point.

And that brings me back to the bigger issue ...

In situations like these, if we assume the wayward writer is an adult, and we assume there are no broader legal issues at play, should the writer's past work be stricken from the record? Is that the right response?

I don't think so. An enterprising snoop could mine caches and old RSS feeds for past copies, so deletion isn't really the Draconian measure it's intended to be. Beyond that, the cat's already out of the bag. The writer screwed up. The publishing outlet looks bad. And any move to wipe the slate clean will leave lasting residue. So why wipe it clean at all?

In situations where the wrongdoing is already public -- whether announced by the publisher or dug up by someone else -- what I'd prefer to see is a prominent editor's note placed at the very top of every piece the writer ever posted on the publisher's site. It could be a simple link to the termination announcement. It doesn't have to be dramatic. The New York Times used a similar tactic with Jayson Blair's articles.

Advertising should be stripped from these pages and comments closed. That's appropriate -- this isn't a revenue or publicity opportunity. But it's important to keep the original material in place. The mistake happened in the public sphere. You can't take that back, but you can be up front about it both in the near-term and down the road.

YouTube's rental experiment wasn't a failure

Commentary

This piece looking at results from YouTube's rental experiment illustrates the short-sighted thinking that handcuffs content companies:

Ouch! We're talking about 1,422 total views, or $5,673.78 for all of the rentals at $3.99 apiece. If Google is giving the filmmakers roughly two-thirds of the take -- and I'm going by other digital-media standards, since the site isn't publicly spelling out the royalty payouts -- each of the five productions will walk away with just hundreds of dollars for their role as video-sharing pioneers over the weekend.

I put this paragraph in the "trading analog dollars for digital pennies" genre. It's catchy. Reasonable on first glance. But when you dig deeper, it's ultimately ridiculous.

That $5,673.78 figure isn't the key. The big deal -- and the hope -- lies in the 1,422 views. That's 1,422 chances for filmmakers to have their work seen. That's 1,422 more chances than they had before. The value of those views lies not in financial rewards (although that would be nice), but as a counter to an artist's great enemy: obscurity. Isn't that why film festivals exist? To show off work? To create the possibility of engagement? To create the possibility of landing theatrical distribution? How is YouTube's effort any different?

Here's the broader problem with this type of bottom-line analysis: digital income will almost always be lower than traditional income because digital audiences are smaller and empowered. They don't have to blindly accept what's given to them. They can pick and choose. They can sample. That's a powerful set of tools. It means control rests solely in consumers' hands.

Consumer control is the essential truth of digital content. Until that's acknowledged -- and until businesses are built to work in conjunction with this truth -- content companies will spin their wheels, lose money, and whine incessantly.

Journalism pet peeves [Ongoing]

Commentary

An ongoing list of journalism habits that get stuck in my craw.

Audience hatred -- You are not better than your readers. You are not smarter than your readers. You can hate readers all you want in your off time, but while you're on the clock you need to serve them with everything you've got. Find value. Create value. Seek viewpoints. Respond to comments. Give a shit. Without an audience, you've got nothing.

Killing (tech) -- Technologies do not kill other technologies. One might supplant another. The market might choose another. But gadgets do not have homicidal urges (yet).

Lists of pet peeves -- That's right. I'm violating my own pet peeve. No one cares! (And yet, I continue ...)

Non-linking -- Please. Seriously. Please. If you include a URL in a story, and that story is posted on the Web, you must take the three extra seconds required to link it in.

Stand-in opinions -- Squeezing a quote out of a source that just happens to dovetail with the exact point you sought to make does not make you objective. At best, you're being opaque. At worst, lame. Just say it. Put it out there. I'd appreciate the honesty. Maybe all the time you've spent researching and talking with folks has given you -- hold on, this is gonna hurt -- an opinion of your own.

Stealing and/or non-acknowledgement -- I realize journalists are supposed to live for the exclusive. That's fine. Competition is a good thing. But when you get scooped, give credit where it's due. Cite the original source and link to the story, even if it's a hated competitor. They won this battle, maybe you'll get the next one.

Got others? Please share them below.

Conferences and custom mobile apps: Yup, that makes sense

Commentary

Attendees at the LeWeb conference held earlier this month had an extra organizational tool at their disposal: a custom iPhone app.

I cannot believe how much sense this makes. As app frameworks become more common, and development costs come down, I can see a point in the next two years when conference apps move from novelty to must-have. Sort of like Wi-Fi (but hopefully more reliable).

And let's not forget the sponsorship opportunities here, either. A smart sponsor could use the app to send a hyper-targeted message to a hyper-targeted audience. Toss in some sort of booth contest, and you've got the marketing equivalent of the Death Star's tractor beam.

Revealed! The true motivations behind survey data

Commentary

Alan Mutter looks at the face-palm-inducing results from a recent newspaper publisher survey. Apparently, execs have high hopes for 2010. Very, very high hopes.

Ridiculousness aside (and these results are truly ridiculous), I found the end of Mutter's piece quite interesting. I think most survey data is crap because it has no way of incorporating the qualitative, subconscious motivations of respondents. People are emotional creatures with wacky ideas. Yet, survey companies and analysts throw projections out there under the billowy banner of Truth.

That's why I was heartened to see the underlying explanations/motivations laid out by one of the guys behind this newspaper survey. This is the type of honesty surveys need:

  • "Wishful thinking."
  • "Print people over-estimating the potential of online (which is the sole factor contributing positive gain)."
  • "Corporate insistence to make the online look better."
  • "If I don't show better numbers, they'll cut my budget.
  • "Optimism is better than slitting your wrists."

Yes! A thousand times yes! This is the meaty, emotionally-honest stuff I want to see. It forces people to take surveys with a grain of salt. Surveys have some value, I'll give you that, but they're only a reference point. That's it. The end-all-be-all, we're-sure-this-will-happen authoritarian perspective is useless.

Hey Amazon, this is what you need to do with the Kindle

Commentary

Books lock content into a container by default. There's no easy way to excerpt or share or disseminate. But digital sets that content free, and that means hardware that delivers digital content needs to facilitate that freedom. False obstacles that seek to duplicate the limitations of print are ridiculous. Hear that, Amazon?

Thankfully -- seriously, thank God for this -- it looks like magazine publishers are getting the message. From the New York Times:

Sports Illustrated's demonstration version -- developed with the Wonderfactory, a design firm -- lets readers organize the magazine by subjects like baseball or football. They can circle photographs or articles and use a toolbar to e-mail an article, print it, view comments, view related items, see relevant Twitter posts or save the article to a favorites file. They can rearrange the order of the issue, see dozens of photos that don't make it into print and pull live scores from all the teams they follow. [Link and emphasis added.]

One last thing. I try to include a source link with all of my tweets and excerpts; just a little something that allows people to go deeper if they're so inclined. That's why tablet editions need a link-to feature. It could take the form of a web-based version of the article (with advertising and marketing all around it, of course). Perhaps it's some sort of intermediate, email-to-a-friend edition. Maybe it's an iTunes-esque redirect. I really don't care what the links look like. They just need to be there.

What we need is a good-better-best approach to digital content

Commentary

Paramount is out with a new online service that lets customers purchase clips from films. As this New York Times article notes, it's initially aimed at advertisers and marketers who want to use the clips in campaigns. Consumers will be let in on the action later.

I have a couple thoughts on this:

1. Kudos to Paramount for giving this a shot. It certainly can't hurt, and we need all the experimentation we can get.

2. I think this is a fantastic opportunity to test good-better-best quality levels. I've long thought there's a way to service different segments of the audience through resolution, features and convenience.

For example, writers, bloggers and others who simply want to reference a clip could grab a lower-resolution version for free (as many already do through YouTube). This boosts awareness and creates branding opportunities for the content provider.

One sidenote: The Times piece suggests folks on the low end -- consumers, mostly -- may have to pay a low per-clip fee. That's the wrong move. These aren't ringtones. Ringtones are a public expression of personality linked to an always-on, always-available device. Embeddable movie clips require placement within media forms, be it a website or a DVD. The all-important personality element is muted. I'm not going to shell out cash if that so-bad-it's-good movie clip only broadcasts my ironic sense of humor to a limited audience. I need exposure, dammit!

But I digress ...

Moving up the scale, companies that want to aggregate clips or make them available as part of another content product could pay a reasonable amount (likely a flat rate for a certain number of clips) and gain access to DVD-quality content. I can see utility here for the education world. A one-stop shop for clips could take a lot of the pain out of the copyright quagmire law-abiding teachers currently face.

On the high end, marketers and advertisers who need full-resolution (1080p, if available) and the absence of co-branding would pay a premium.

What won't work is an "everyone must pay" declaration. I'm assuming that since this got written up in the Times, and given that a consumer option is part of the longer-term gameplan, Paramount wants this to be more than a back-channel marketers' tool. Otherwise, why publicize it? This is clearly a public-facing product. As such, it needs to properly service the unique needs of all audience segments.

Social media doesn't make money directly, but it still has enormous value

Commentary

Perhaps it's a function of the intricate tracking the Web provides, but I'm still amazed at media's inability to grasp the secondary (and often, tertiary) value of community efforts.

So let's make this as clear as clear can be: Twitter, Facebook, forums and other social media functions rarely make money directly. Their value comes from the attention they gather and the opportunities that attention creates. If you have a mass of people who have willingly opted-in to your messaging, you damn well better put useful, for-pay products in front of them. Otherwise, all you've got is a social club.

This recent piece from Forbes does a nice job tearing down the direct-revenue mindset.

Judging Dell's Twitter revenue against company revenue misses the point

Commentary

Twitter and DellIf Dell turned heads last year when it claimed to have made $1 million through Twitter, its revised estimate for 2009 is going to cause nasty neck pulls: the company says Twitter revenue jumped to $6.5 million. (I'm assuming that spans multiple years.)

The Guardian has a nice bit of analysis on the announcement. It's informative and interesting. It weaves in some contextual bits. But nestled amidst the numbers is the "drop in the bucket" paragraph that always pops up in these types of stories:

Although $6.5m sounds impressive, when you compare it with the net revenue of $12.3bn Dell reported in the first quarter of fiscal year 2010 it becomes clear that this is only a drop in the ocean ...

Sorry. I guess that's a " drop in the ocean" paragraph. You get the idea.

I understand the need to insert this text. Its absence would surely raise a red flag for editors and consumers alike. But there's an underlying perspective here that I believe is damaging, and I wish more analysts would call this out.

Social media exists in a space totally different from traditional business. Activity takes place at the edges, not the center. It's ambiguous. It's fleeting. Because of all this, judging social media efforts against traditional channels obscures the real analysis and the real opportunity.

What's notable about Dell's Twitter revenue is that it went from $1 million in 2008, to $3 million in June '09, to $6.5 million now. That's an enviable trajectory in any business, but it's doubly impressive here because Dell is making actual money through a nascent system. It found a way to put social media's tricky architecture to work.

That's key. Digital disruption is wiping out the fat revenues from traditional models. Many businesses will get smaller simply because consumers have more power and more choice. The companies that find ways to make money within this new landscape -- even relatively small amounts of money -- have a better shot at adaptation.

Images courtesy Dell, Inc. and Twitter, Inc.

My line between edit and sales blurred years ago. It's not that big a deal

Commentary

I was fortunate to have my ill-conceived notions about editorial/advertising segregation blown to bits early in my career. It hurt. No doubt about that. I came out of journalism school with all the requisite ethical boundaries and red flags intact. So it was tough to let that go.

But it was so useful to let that go. It made me see that most journalism organizations are businesses. That's it. All that stuff about objectivity and watchdog roles and the Fourth Estate sounds good, and it feels good, but news companies must ultimately adhere to the same criteria as every other business: does it make money or does it lose money?

That's why it's interesting for me to watch others go through the same gyrations now that the Dallas Morning News is moving editorial and sales closer together. I get it. This is hard to swallow. It goes against everything journalists know, everything we're taught in the vacuum of j-school. It seems dangerous.

But having lived through my own transition, and having traversed some tricky edit/ad terrain along the way, I can tell you the danger is minimal. Perhaps even non-existent.

First off, consumers don't care. If the content is informative and entertaining and useful, if readers can justify the time and money spent, they're good. Second, a smart news business understands that it cannot undermine the trust it's established with the community. This has nothing to do with public interest or greater good. It's about money. Trustworthy content builds an audience, and audience attracts advertisers. Kill the trust and you kill the audience; advertisers will take their business elsewhere. That's all there is to it.

Blurring the edit/ad line within a newsroom isn't a big deal. It's what happens after the blurring that matters. If the Dallas Morning News cranks out great stuff and serves/educates/helps people, this can work for everyone involved. If they do something stupid -- like violating trust by kowtowing to clients -- they're screwed. That's just business, and bad businesses die.

The glory of a thought process, as illustrated by John A. Byrne

Commentary

John A. Byrne is leaving BusinessWeek to start a new business (not exactly a newsflash, I know). I generally don't care much if a bigwig leaves a position to venture out on his or her own. That happens all the time. But Byrne is different. BusinessWeek, for all its financial trouble, has a phenomenal web presence, and much of that was built under Byrne's watch. He's also a guy who inherently understands the power of direct communication with the audience. Just take a look at his Twitter feed. How many editors engage like that?

And then there's this ...

In a blog post announcing his new venture, he articulates the beliefs that guide his thinking about digital content:

I have three fundamental beliefs that inform my thinking: 1) Print advertising will never come back. There are just too many options for advertisers today and too much pressure on rates. Sadly, success in print will be measured in single-digit declines, forever. 2) Online advertising will never offset those declines nor save print. There's far too much competition online and far too much available inventory; and 3) Users will not pay for content, unless they're convinced it has immediate and tangible value. Very little journalism meets that standard today. Do we really need 57 versions of a story on Bernie Madoff pleading guilty?

That's a beautiful paragraph. Here's why:

  1. He's dead on.
  2. It illustrates the type of structural thinking that turns vague ideas into real businesses. We need more editors and publishers who work this way. Big ideas and grand plans cannot stand on their own. They have to be crammed into a structure -- a mental furnace that burns away assumptions. Otherwise, all you've got is brain-based vaporware. That useless, fluffy business school nonsense that gets retweeted, and buzzed, and expanded into book form. We've got enough of that.

I speak from experience with this structure stuff. I used to wander aimlessly through the "future of content" world, distracted by shiny new things and influenced by flavor-of-the-week thinking (I once thought micropayments were totally going to happen ... ugh.) But six months ago I decided to map out my own structure for all this digital disruption business. The result is this. I have no idea if it has any value as an actual business model, but the writing process forced me to hone and articulate the thousands of rants and opinions brewing in my head. Now, when I'm confronted with a new idea or perspective, I can feed it into this structure and quickly examine the various angles. It's helped me tremendously. I've got my footing now.

The Kindle is a big, shiny, distracting object

Commentary

Hey book people: don't be fooled by the Kindle. Amazon has no interest in hardware.

That's the conclusion Joe Wikert reaches in an excellent bit of analysis. I couldn't agree more. The Kindle is a big, shiny object that's distracting everyone from Amazon's more subversive (and smart) move: It's trying to become the source of ebooks. It doesn't want to own that market. It wants to rule it.

It's entirely possible that Jeff Bezos and Co. originally sought to duplicate Apple's iPod-iTunes model. But take a look at the evidence Joe presents: At some point in the last two years, Amazon realized it's not Apple. The hardware gambit only works if you create something miraculous. The iPod and iPhone certainly qualify as technical marvels. Spend 30 seconds with an Apple product and you'll come away deeply impressed. Spend 30 seconds with a Kindle and you'll want your 30 seconds back.

Amazon just can't cut it in the hardware game. I bet the higher-ups don't particular care, either. This is a company that redefined retail efficiency. It's masterful at satisfying consumer demand, more so than Apple or even the big daddy of the retail chain, Wal-Mart. Publishers need to realize -- and the smart ones already do -- that the Amazon threat doesn't lie in a device. It's in the distribution.

Honing my thoughts on book publishing's big issues

Commentary

I recently had the privilege of being interviewed by Victoria Sandbrook. In a serendipitous twist, I found that by answering her questions I clarified some of my thoughts around book publishing's big issues. What follows is largely for my own archival purposes.

1. What is the best thing publishers can do to get ahead in the digital marketplace?

The thing they can do right now is centralize their editorial and production processes around "content creation." Not "print books." Not even "ebooks." They've got to create content.

XML is a big key here. It creates flexibility to take advantage of all forms: print, EPUB, PDF, HTML, a hologram imprinted on your brainstem, etc. A digital-centric workflow also lets publishers quickly adapt to new ideas.

2. What parts of the established publishing model are most hurting expansion into digital publishing?

There are a couple that occur to me. The first, and biggest, is a print-first mindset. That's a massive detriment because print is locked down and inflexible. Building digital products out of print products is unbelievably inefficient. And really, it's just dumb. Everyone creates content in a digital form these days -- know anyone who still uses ink and parchment? Why would you take something that's already digital, lock it down in print, and then retroactively attempt to create digital formats from that inflexible product? It doesn't make any sense.

The second issue is disregard for consumers' growing power. The old model worked to the advantage of publishers and retailers. High distribution and production costs meant only the most committed businesses had the clout needed to get books into the marketplace. These firms could set their own terms because consumers didn't have an Amazon-like option as an alternative. But now they do. Any publisher who does anything that works against the consumer is shooting itself in the foot. DRM is a perfect example. You're not protecting content with that. You're pissing off your best customers by preventing them from doing what they want with the content they purchased. And you're doing that within an environment where the consumer has the power! I understand the DRM impulse. I really do. It's a reaction to an irrational fear. But cooler heads need to prevail here, and that requires a deep understanding of market reality.

3. Why should small publishers stay small?

I'm totally biased toward this "small" thing, so take all this with a grain of salt ;) It's the ravings of a small evangelist ...

Anyway ... after 5 or 6 years of studying digital disruption in the content industries, I've reached one conclusion: there's a successful model here, but it's much smaller than what we're used to. Someone may very well figure out how to create a giant business within digital's dispersed environment (Google certainly cracked that code), but this mythical company will not accomplish this feat by transitioning a giant business built in a different age wholesale to the digital world. It just doesn't work. Pricing is lower. Audiences are large, but dispersed. Consumers have unbelievable choice. So a business can't count on 20 or 30 percent margins in this environment. It might achieve those margins in time, but you can't walk into a digital business expecting those.

That's why I believe small publishers are uniquely positioned to take advantage of digital. The Web creates stunning efficiencies. You can reach huge numbers of people through low-cost marketing (blogs, social media, etc.). You can manage inventory through low cost back-office software. You can even set up your organization to only produce physical products when they're ordered (print on demand). There's a lot of upside here. And small publishers have the agility to do these things. They aren't trying to figure out how to support thousands of employees. They're generally unencumbered by the old model. That's liberating.

Problems arise when small publishers grow too fast for their own good. No one has figured out the end-all, be-all model of digital publishing. There are no assumptions, yet. There may never be. As such, a small publisher needs to be able to justify expansion because there's no guarantee -- or even a hint of a guarantee -- that their larger size can be supported by fickle and fluid digital audiences. Think of it this way: Would you take on a $1 million mortgage if your annual earnings fluctuate wildly? Probably not (although that may be a bad analogy given events of the last two years ...). I'm not saying don't take risks. You have to do that. Just take smart ones. Understand how the digital environment is different from the traditional marketplace. Once you get that, you can correctly assess your options and make the best possible decisions.

I'm much more interested in building businesses, not saving them. "Small" is the foundation upon which all businesses are built. They get big. They don't start big. We're in an odd moment in history where the sea change of disruption is forcing big businesses to transition ("save themselves"). That's unusual. In normal times -- or less disruptive times -- entrepreneurs build new businesses and grow them. Currently, we've got entrepreneurs doing their small-business thing, but we've also got these massive organizations attempting to shift to something new. I think those big businesses need to take a note from the small guys. They need to build businesses in this new environment. Not save them. Not ask for government handouts. Not hope for deus ex machina in the final act.

I'm reminded here of newspapers that closed earlier in 2009. The staffs thought they'd gather their resources and launch their own online-only publications. That's not a bad idea, but they approached it the wrong way. They were trying to create something that could support 150-200 people out of the gate. Unless you've got massive venture capital funding, that's not going to happen (even then ... it's just such a bad idea). Had they opted to create an online-only product and then grow it appropriately, they would have had a much better shot at success.

4. What do you think will "flip the switch" on digital text? What will make it become the dominant product we publish?

I think it'll be a gradual evolution that builds toward a tipping point. We're in the evolutionary stages now ... the upside of digital is becoming apparent to envelope-pushing publishers. Devices are being created to deliver digital content. Younger generations are more and more acclimated toward finding and absorbing material in a digital format.

The thing that tips it could be a device. That's always exciting and fun. But it might also just be the inevitable moment when more money can be made from digital content than print content. It's really hard to say.

I know publishers of all types like to point to the iPod as a tipping point moment. And it was to an extent. But the debut of that device was made possible by a massive number of decisions made prior to the iPod's arrival. The move from cassette to CD, for example. There's no way the iPod would have arrived when it did if people weren't already accustomed to digital music. The leap from cassette to "digital file" was too great. But the shift from cassette to CD to digital file was easier. See what I mean? There's all these little steps that add up, and you really can't see the lines connecting the dots until you look back over the history of a format or device. To me, that's one of the most intriguing parts of this. There are forces at play and things happening that we won't fully understand until much later. Again, acknowledgement of this is the first step. Creating the agility needed to take advantage of these opportunities is the second. It's like catching a no-look pass. You need to read the situation to know that pass might be coming your way. You also need the dexterity to snare that ball when it suddenly appears.

5. Why is Amazon's e-book pricing problematic?

Amazon's pricing is only problematic for publishers. It's great for consumers. It's great for Amazon, too, even though they're currently subsidizing a whole lot of the cost. But Amazon is a long-view company. I've always respected Jeff Bezos' ability to shrug off short-term naysayers and keep his focus on the horizon. And that's why Amazon's $9.99 price point is a big problem for publishers. In Amazon, they're up against a company that's in it for the long haul. Amazon is willing to pay a lot of money short-term to redefine the marketplace for digital books. If that redefinition happens -- and I can't see why $9.99 wouldn't be more successful than $19.99 or $29.99; lower is almost always better -- Amazon will be able to go back to publishers and say: "We're your biggest retail channel. We set our prices at $9.99. We're ending our subsidy and taking 20% for ourselves. You'll need to adjust your pricing (and your business ... and your entire model) accordingly. Take it or leave it."

That's the power of popularity. That's what Amazon is doing here (I think ... Bezos and Co. are a lot smarter than me).

Now, some in the book publishing world believe they need to create a competitor to Amazon. Collusion concerns aside, that's not a bad idea. Competition is a good thing. But there has to be a Plan B, and it must come from within publishing organizations. Publishers need to figure out how to make money on $9.99 books (or $4.99 if they're iPhone apps ...). You do NOT want to challenge consumer expectation. Truly, the price point isn't about Amazon. It's about Amazon's ability to harness consumer expectation as leverage. And they're doing that masterfully. So publishers need to get out in front of this and figure out how to make money on those lower price points. Centralization of content through an XML workflow is one way. That increases efficiency. But publishers also need to experiment with different platforms (iPhone, Android, their own sites, etc.) They also need to consider ways to serve consumers through non-book products. I don't have the answers here. I just know that when you're confronting an adversary head on, it behooves you to consider flanking maneuvers.

Well, damn. DVRs aren't so bad for advertising after all

Commentary

Remember how DVRs were going to kill TV advertising real bad? Yeah ... about that:

Against almost every expectation, nearly half of all people watching delayed shows are still slouching on their couches watching messages about movies, cars and beer. According to Nielsen, 46 percent of viewers 18 to 49 years old for all four networks taken together are watching the commercials during playback, up slightly from last year. Why would people pass on the opportunity to skip through to the next chunk of program content?

I love the explanation for this seemingly impossible turn of events:

The most basic reason, according to Brad Adgate, the senior vice president for research at Horizon Media, a media buying firm, is that the behavior that has underpinned television since its invention still persists to a larger degree than expected. "It's still a passive activity," he said. [Emphasis added.]

Sure is! Never underestimate the power of passivity.

The New York Times deserves kudos for writing this story because, far too often, the Chicken Little projections of execs and analysts are left unchecked. Consumer behavior and disruptive technologies are moving targets, so remember that the next time the latest iPhone killer or Kindle killer or ad killer or media killer is touted. Reality is contextual and complicated.

Early signs that content creators and platform providers aren't on the same team

Commentary

It often seems that major content companies and platform firms walk in lockstep when it comes to digital distribution, but two articles published today reveal significant philosophical differences.

Here's an excerpt from a Bloomberg story on Viacom's uneasy relationship with online viewing:

Viacom has to ensure that placing television shows and films online adds to its profit, through sources such as advertising sales, subscription fees and revenue from enabling users to buy content by downloading it, [Philippe] Dauman said. The viability of such a model relies on strong intellectual property safeguards, he said. [Link added.]

And here's a passage from an AP story looking at a similar online offering from Comcast:

Comcast executives said the company plans to generate revenue by adding more and different types of ads on the sites. But the company's goal is not necessarily to profit from it but to keep subscribers happy enough so they don't cut the cord or defect to a competitor. [Emphasis added.]

The content creator is worried about direct revenue from the content, while the platform provider is more concerned about keeping its subscribers happy. It'll be interesting to monitor Comcast's mindset if/when that NBC deal goes through.

Amazon Resurrects Orwell Annotations and Opens a New Can of Worms

Commentary

In an attempt to tie up the Orwell debacle, Amazon is offering affected customers replacement copies of "1984" or "Animal Farm" and the reinstatement of any personal annotations. From the New York Times:

Amazon said in an e-mail message to those customers that if they chose to have their digital copies restored, they would be able to see any digital annotations they had made. [Emphasis added.]

It's been more than a month since Amazon extracted the questionable Kindle editions, yet assumed-dead user notes now spring phoenix-like from the Orwellian ashes. Why the delay? Amazon, it would appear, claims jurisdiction over the saving, disassociation, and, if it's feeling magnanimous or motivated, full reinstatement of user notes according to its own schedule.

Playing devil's advocate, it may be that Amazon felt the controversy surrounding the Orwell deletions warranted back up of the notes, and perhaps the restoration delay was tied to a rights issue. But even with these (potential) explanations, a "surprise note resurrection" reeks of creepiness. If Amazon didn't delete annotations associated with illegal books -- an unfortunate but reasonable bit of collateral damage -- then what does it delete? Are the mistakes and alterations in my shopping cart history burned into a permanent record? Can a deleted S3 file miraculously reanimate? I can't help but raise an eyebrow toward all of Amazon's services, which is a shame since I admire the company's non-Kindle offerings.

"User" and "Customer" are Different Animals In the Freemium World

Commentary

The New York Times' recent piece on Evernote inadvertently cracked open an important question in the "freemium" discussion: What's the difference between a user and a customer?

The language attached to freemium business models requires specificity because these businesses associate expectations with distinct user groups. With freemium, there's a vast canyon between free access (users) and pay access (customers); they are not synonymous. That's why the following clarifications are necessary:

User -- A visitor who accesses a site, product or platform, but does not pay. Example: I use Dropbox, but I don't pay for the top-tier services (yet ...)

Customer -- A converted user who now pays for premium access or services. Example: As my storage needs increase and I become more reliant on Dropbox, I'll likely convert into a paying customer.

I realize this entire post teeters on nitpicky semantics, but heated debates require clear boundaries.

Sidenote: I highly recommend the Times' Evernote story. It's a great representation of the opportunities and obstacles that come with freemium models, and it has actual numbers.

Yes, But How Do You Feel? Sentiment Joins the Web Analytics Toolset

Commentary

The New York Times examines sentiment analysis:

An emerging field known as sentiment analysis is taking shape around one of the computer world's unexplored frontiers: translating the vagaries of human emotion into hard data.

This is more than just an interesting programming exercise. For many businesses, online opinion has turned into a kind of virtual currency that can make or break a product in the marketplace.

Amy Martin briefly mentioned sentiment during her presentation at Twitter Boot Camp in June (the sentiment stuff is in slide No. 9). The concept caught my attention because it strays from typical number-centric measurements like page views, user-session times or velocity. For someone like me, who believes numbers and non-numerical "soft" analysis must exist in harmony, it injects a much-needed psychological component into the audience dynamic. This commingling of data and feelings is why NBC Local's mood tool is so interesting.

But let's not get ahead of ourselves with the touchy feely business. Sentiment's power as a data point is limited because it's a loaded concept with infinite variations. If my "positive" could be your "neutral," how can a measurement tool adequately capture sentiment on a broad, numerical level? It can't. Not reliably, anyway. Wild swings and spikes will appear in graphs, but small percentage shifts between open-ended terms are too ambiguous to rely upon. That's why sentiment needs to function as a general data point for online engagement. It's a single tool on a big analytics workbench.

Mac Slocum I'm an editor, producer, writer, teacher and Red Sox fan. If you want to know more, read my bio.



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